Tag Archives: industry
Call for review of UK housing policy
The UK government needs to review its current housing policy and commit to a managed withdrawal of current property market support as a priority, according to the Intermediary Mortgage Lenders Association (IMLA). It has published its criteria for housing and mortgage policy pledges in the build-up to the 2015 election and says that with owner occupation set to fall from 64% to 59% in the next parliament, an ‘open and frank debate’ is needed about whether conservative lending benefits all. The IMLA argues that a clear overarching housing strategy is an essential requirement for the next government. This would replace a policy focus that has frequently favoured short term, eye catching and also conflicting measures over the last 30 years. As a result, successive governments have prioritised specific market segments at the expense of others rather than following a cohesive strategy across tenures and parliaments. In its paper UK Election 2015 – criteria for housing and mortgage policy pledges, IMLA also asserts that regulators’ response to the financial crisis and lenders’ responses to the new rules and their supervision have created a more conservative mortgage market. With owner-occupation set to fall from 64% to 59% over the next five years over the next parliament, the IMLA calls for the next government to ensure a more appropriate balance of choice and protection for consumers, in place of fragmented policies and regulatory interventions. The document sets out five specific requirements that should be tackled by the next government. These include establishing a programme for a properly managed withdrawal of government measures supporting the housing market and implementing a state or privately backed mortgage indemnity guarantee (MIG) to succeed Help to Buy and support high loan to value (LTV) borrowing in the long term. It also includes introducing measures to support downsizing by older households and increase liquidity in the housing market, carrying out a full review of the cumulative impact of regulatory changes for mortgage lending, including new capital adequacy requirements, macro-prudential rules and affordability assessments and engaging in an open discussion on the role of the sub-prime mortgage market in helping to meet consumer needs. ‘There are difficult and worsening housing problems across most of the UK, which mean the housing and mortgage markets will be a dominant issue in the 2015 election. A number of key agendas demand a response from politicians, and the consequences of their actions are likely to be felt for many generations to come,’ said Peter Williams, IMLA executive director. ‘We need to recognise that tenure patterns are changing and there is a wider diversity of housing needs in modern society than ever before. Home buyers face much greater challenges as a result of house price rises and financial services regulation. Private renters are confronted by high rental inflation and variable quality and social renting no longer provides an adequate safety net for those who cannot afford to house themselves via the market,’ he explained. He pointed out that a… Continue reading
Peer to peer lending set to change the UK mortgage industry, it is claimed
Peer to peer finance is set to revolutionise the UK mortgage industry, starting with secured lending to landlords, according to a new independent review of the buy to let mortgage industry. Population growth combined with a weak home building response mean the phenomenon of buy to let would survive a new recession similar to, or even worse than, that experienced in 2008, according to the research conducted by The Wriglesworth Consultancy and commissioned by peer to peer lender Landbay. However despite this, the research also reveals the higher price of buy to let finance, with average new mortgage rates one third more expensive for landlords than for owner occupiers. This leaves a gap for P2P mortgage lenders to disrupt the industry. In the first ever published stress tests for a peer to peer lender, the report also reveals that secured peer to peer lending against buy to let properties has a natural stability against economic shocks. This contrasts with severe uncertainty over other types of riskier peer to peer finance, such as unsecured personal loans to consumers, business credit, or other forms of direct peer to peer property ownership and development finance. Stress tests of Landbay’s loan book also indicate the importance of quality manual underwriting when lending to landlords. More attention to landlords’ personal finances makes loan books less prone to losses than historic examples of mass buy to let lending using automated underwriting systems to approve loans. ‘The mortgage world has changed. Now everyone has access to the sorts of markets that were once the preserve of large financial institutions,’ said John Goodall, chief executive officer of Landbay. ‘A new energy for more inclusive finance, combined with new technology, is revolutionising the world of saving and borrowing. This has only just begun, and over the long term the impact of these fundamental changes will be far greater than was at first envisioned,’ he explained. ‘All peer to peer finance is relatively new, but it would be an enormous mistake to assume that means this broad swathe of lending is in any way uniform. Combining P2P lending with the backstop of income producing property as security can create an entirely different class of investment while shaking up competition in the world of mortgage lending,’ he added. Continue reading
New starter home initiative announced by UK government
A new scheme offering 100,000 first time buyers in the UK new homes with a 20% discount has been announced by the Prime Minister as part of a major push to help people onto the housing ladder. Aspiring home owners will be asked to register their interest in buying via the Starter Home initiative from the start of next year, an initiative that has been brought forward by at least six months earlier than planned. There will be a change to the planning system to free under used or unviable brownfield land from planning costs and levies in return for a below market value sale price on the homes built on the site. Developers and councils are being asked to respond to the proposals to ensure the changes will unlock a range of sites across the country. Many of the country’s leading house builders and councils are already looking at sites that could be used for new homes. The 100,000 homes will be available to first time buyers under the age of 40 as part of the initiative and work on the first raft will start next year following a consultation period that is due to end on 09 February 2015. At the heart of the Starter Homes initiative is a change to the planning system. This will allow house builders to develop under-used or unviable brownfield land and free them from planning costs and levies. In return, they will be able to offer homes at a minimum 20% discount exclusively to first time buyers under the age of 40. Currently, builders can face an average bill of £15,000 per home in Section 106 affordable housing contributions and tariffs, often adding tens of thousands to the cost of a site. Under the proposals, developers offering Starter Homes would be exempt from those Section 106 charges and Community Infrastructure Levy charges. The homes could then not be re-sold at market value for a fixed period, making sure that the savings are passed onto homebuyers. Already leading house builders, including three of the nation’s largest and councils from up and down the country have pledged their support for the initiative, which will bring much needed homes onto sites that have previously been deemed unviable and are lying unused. More than 30 house builders have said that that they support the plans and would consider bringing forward land to develop the new, discounted houses, from next year. A new design panel, including world famous architects such as Sir Terry Farrell and Sir Quinlan Terry will be established to ensure that new homes are not only lower cost but also high quality and well designed, giving hardworking house buyers attractive homes that meet the demands of modern life. ‘Hard working young people want to plan for the future and enjoy the security of being able to own their own home. I want to help them do just that. Under this scheme, first-time buyers will… Continue reading
